Afghan bank furore fuels war doubts

The Afghan central bank chief's resignation and flight to the United States will fuel foreign anger about the cost in blood and treasure of the war effort as US-led troops begin to leave, experts said. Abdul Qadir Fitrat, the chairman of Da Afghanistan Bank, claimed in media interviews that a scandal over fraud-hit Kabul Bank, which is linked to influential figures close to the government, had put his life in danger. Analysts in Kabul say the fresh twist in the long-running saga will again spark doubts over the price of the decade-long, US-dominated effort in Afghanistan and the probity of President Hamid Karzai's government. "From the public point of view in the West, they will ask questions about this, very legitimate questions on the part of the taxpayers," said Najeeb Azizi, an economics lecturer at the American University of Afghanistan. He said the current crisis showed "how fragile the Afghan state is" and how much support Afghanistan still needs from the international community. "There's no doubt, this country cannot be left on its own," he added. With the transition from foreign to Afghan forces due to start in some areas from next month and 10,000 US troops leaving this year, Western officials say now is the time for Karzai's government to show it can govern well. But some experts predict that Fitrat's resignation is likely to hurt the government's already battered reputation and could further hit sharply diminished aid flows to the desperately poor country. "This will worsen the reputation of the government of Afghanistan with the donor community," said Gran Hewad of the Afghanistan Analysts Network think-tank in Kabul, predicting a "reduction of aid" as a result. Fitrat has named high-profile figures who were allegedly involved in a corruption scandal amounting to nearly $1 billion at Kabul Bank, Afghanistan's biggest lender whose co-founders include a brother of Karzai. Fitrat's central bank took over the lender last year after claims that executives had given themselves secret loans that were partly used for a property-buying spree in the Gulf emirate of Dubai. Even before Fitrat fled, disagreements between Kabul and the International Monetary Fund (IMF) over Afghanistan's handling of the bank crisis led to the withholding of hundreds of millions of dollars in foreign aid. The IMF refused to renew its loan programme for Afghanistan last September, triggering doubts among other donors that their aid would be well used. The international lender has since indicated that the start of a new programme is linked to a satisfactory resolution of the Kabul Bank crisis. Some Western officials in Kabul warn that Afghanistan could run out of money as early as next month as a result of the scandal. Others say that Afghan officials could find a way to tide themselves over by reallocating funds. Hewad said the departure of Fitrat could make the banking situation harder to fix in the long term and urged the IMF to show more flexibility. "This is a new state, a democracy, a new free-market economy," he said. "The position that the IMF has taken is increasing the fragility of the situation," he said. "They must be more flexible and take a more supportive (stance) than they have until now." Kabul University economics professor Sayed Massoud said that regardless of what happens, the Afghan people would be the real losers. "The Kabul Bank issue is not an economic problem, it's rather a political-economical problem that has brought numerous issues before the country," he said. "The ones that suffer the most are the Afghan people."